Bloomberg Businessweek - USA (2019-12-23)

 TECHNOLOGY Bloomberg Businessweek December 23, 2019

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FRIEDMAN: COURTESY PATRI FRIEDMAN. ILLUSTRATION BY FELIX DECOMBAT

○ A former Google engineer and international-waters expert

is trying to fund the development of terrestrial city-states

Land Ho for Silicon Valley’s

Seasteaders

Patri Friedman is sick of the jokes about floating

tax havens. About a decade ago, the former Google

software engineer (and grandson of Nobel Prize-

winning economist Milton Friedman) co-founded

the Seasteading Institute, a nonprofit with the

stated aim of developing a model for self-governing

offshore communities. The idea was to allow peo-

ple to set up more laissez-faire laws for themselves

on mobile, artificial islands resting in international

waters. An invaluable experiment, he calls it now.

Also: “Baggage.”

The institute’s Silicon Valley backers most prom-

inently included Peter Thiel, the conservative

billionaire and future Trump adviser, and traded

in no small part on Thiel’s imprimatur. But the

effort was as impractical as it sounds, and it drew

criticism from local leaders and good-government

groups as a form of neocolonialism. In 2018 locals

defeated a commercial spinoff ’s attempt to estab-

lish a seastead off the coast of Tahiti. Seasteading,

like vampirism, is now on the unofficial list of top-

ics not to raise with Thiel, who hasn’t written the

institute a check in at least five years. Nonetheless,

he’s become the anchor investor for Friedman’s

newventurecapitalfirm,whichistryingtocre-

atesomesimilar-soundingcommunitiesonland.

PronomosCapital,whichFriedmanincorpo-

ratedinAugust,is supposedtobankrollthecon-

structionofexperimentalcitiesonvacanttractsof

landindevelopingcountries.Pronomosis setup

likea venturefund,makinginvestmentsinlocal

organizationsthatdotheworkofsecuringgovern-

mentapprovals,findingtenants,andhiringretired

U.K.judgestoenforcethenewlegalframework,to

bebasedonBritishcommonlaw.Thefirmsaysit’s

discussingsemi-autonomouscitiesofvaryingsizes

withforeignandlocalbusinesspeopleincountries

whereofficialshaveseemedreceptivetoexempting

themfromarealaws,includingGhana,Honduras,

theMarshallIslands,Nigeria,andPanama.A given

communitycouldstartassmallasanindustrial

park,Friedmansays.Mostwillbeaimedatforeign

businessesseekingfriendliertaxtreatment.

Whileotherorganizationswithnamessuch

asFreePrivateCitiesandCharterCitiesInstitute

as much as $10 million a year in guaranteed

salaries alone.

But billions of dollars of venture capital and

private equity investment have flooded the legal

industry in recent years—broad bets that technol-

ogy will be able to handle an ever-wider range of

legal tasks and reduce the need for paralegals and

associates. Wilson Sonsini is the only major U.S.

law firm making a serious bid to bridge the divide

by automating its own associates’ work.

The firm is well-placed to venture into emerg-

ing legal technology. In 1980 it helped take Apple

public. In 2004 it did the same for Google. More

recently it has represented Lyft Inc. during its

initial public offering preparations and advised

LinkedIn on selling itself to Microsoft Corp. Parker,

a former litigator at rival firm Quinn Emanuel

Urquhart & Sullivan, who helped develop docu-

ment automation software in collaboration with

Brigham Young University, is still struggling a bit

with the basics of wrangling a sales team. “What

I didn’t realize is there is actually a mechanism

and skill set to sales that has nothing to do with

demo-ing the product,” he says. “Like, most of

sales is following up consistently but in a way that

isn’t annoying.”

The California compliance software went on

sale in July; Parker says he expects it to bring in

$4 million by the end of 2019. That’s roughly the

amount of revenue that four of Wilson Sonsini’s

770 lawyers generated for the firm last year. But

the SixFifty team is a lot cheaper, with a total 2019

budget of about $2 million, the equivalent of about

10 first-year associates’ starting salaries.

Parker’seffortsarelikelytofaceseriousskep-

ticismevenfromhiscolleagues,aswellasat

rivalfirms,saysDanLinna,a lawprofessorat

NorthwesternUniversitywho’sstudiedinnovation

intheindustry.Buthesayssomedegreeofauto-

mationisinevitable,andWilsonSonsinishould

continuetoinvestinSixFiftyratherthanrelegate

it totheroleofa marketingtool.

SixFiftysaysit planstoreleasesimilarsoft-

warenextyearthat canhelp clientscomply

witha broaderrangeofdatasecuritystandards.

“Thosetoolsarereally justa deliverydevice

forthehumanexpertise,”Parkersays,adding

thatit’seasytoimaginethemapplyingtothe

ForeignCorruptPracticesAct,forexample.“We

willjustdeploythosetoolsoverandoveragain

until,I don’tknow,untilthecowscomehome.”

—RoyStromisa reporterforBloombergLaw

THE BOTTOM LINE SixFifty is operating like a startup in the

shadow of its Big Law corporate parent, but may be a leading

indicator of a declining need for Wilson Sonsini’s human lawyers.

○ Friedman